If I had the ability to add one more item to Utah’s exemption list (stuff you can keep in abankruptcy) it would be $1,000 exemption in a Health Savings Account (HSA). The legislature rarely changes what is exempt. Employers are more frequently offering HSA’s and FSA’s (Flex Spending Account) to reduce the cost of healthcare and allow consumers more choice in healthcare decisions (two really big problems with our current system).
When you file a bankruptcy, the trustee will treat your HSA or FSA just like a bank account. Any money in your bank account is not exempt so the trustee can require you to pay him the amount left in your account. Which is why you need to spend that money, just like you need to spend down your bank account.
The problem is you can’t just go buy a year supply of food or a new refrigerator with your HSA money. So what do you spend it on? The Wirecutter has a great article that has some great ideas on products you can buy with your HSA money. There are a few things that would be useful to have that I did not think about that you could buy with your HSA money, including sunscreen, prescription sunglasses, first aid kits, thermometers, and blood pressure monitors.